\u3000\u3000 Power Construction Corporation Of China Ltd(Powerchina Ltd)(601669) (601669)
Event: Power Construction Corporation Of China Ltd(Powerchina Ltd)(601669) announced that from January to December 2021, the total amount of new contracts signed by the company was about 780.283 billion yuan, a year-on-year increase of + 15.91%. Among them, the amount of newly signed contracts in China was about 616.049 billion yuan, a year-on-year increase of + 30.61%; The amount of newly signed contracts abroad was about 164.234 billion yuan, a year-on-year increase of – 18.54%. The total amount of newly signed contracts for water conservancy and power business outside China is about 310.381 billion yuan. comment:
The growth of orders in a single month has significantly accelerated, and the downstream demand may be gradually improving:
The newly signed contract amount of the company in December 21 was about 158.45 billion yuan, with a year-on-year increase of + 108% and a month on month increase of + 171%. There were obvious signs of acceleration of newly signed orders. From a regional perspective, the newly signed contract amount in China in December was about 111.56 billion yuan, a year-on-year increase of + 180% and a month on month increase of + 184%; The amount of newly signed contracts abroad was about 46.89 billion yuan, a year-on-year increase of + 29% and a month on month increase of + 146%; China’s foreign orders have significantly accelerated.
According to the large order data released by the company, the total amount of newly signed large orders (single orders with a contract amount of more than 500 million yuan) in China in December 21 was about 46.76 billion yuan, accounting for 42% of the newly signed contract amount in China, significantly increasing month on month (22% in November); The maximum contract amount of a single order is 4.545 billion, accounting for only about 3% of the total newly signed contracts in December. The total amount of newly signed small orders (single orders with a contract amount of less than 500 million yuan) in China in December 21 was 64.8 billion yuan, which was only lower than the amount of newly signed small contracts in China in March. Judging from this, the acceleration of order growth in December is not due to the signing of individual large orders, but due to the centralized release of market demand, or indicates that downstream demand is gradually improving.
In terms of the types of large orders, the new large orders signed in December 21 were distributed in various sub fields of infrastructure and new energy construction, including urban renewal, pumped storage power stations, rail transit, water conservancy projects, expressways, resettlement houses, airport reconstruction and expansion, wind farm construction, etc., mainly municipal and infrastructure projects, It further shows that the improvement of downstream demand does not come from a specific field, or from the steady growth of infrastructure, which is gradually developing.
Profit forecast, valuation and rating: Power Construction Corporation Of China Ltd(Powerchina Ltd)(601669) has competitive advantages in the fields of power construction and operation investment, water conservancy and water environment treatment and operation. In December 21, the company’s order growth significantly accelerated, or it indicates that the steady growth of infrastructure is developing, and the downstream demand may be gradually improving. We are optimistic about the company’s business development in the field of new energy power generation operation assets and its competitive advantage in the engineering field during the 14th Five Year Plan period. Maintain the company’s EPS forecast of 0.58 yuan, 0.65 yuan and 0.72 yuan from 2021 to 2023, and the current price corresponds to the company’s 22-year dynamic P / E ratio of 14x, maintaining the “buy” rating.
Risk tip: the demand for contracted construction of new energy power generation projects is lower than expected, the growth rate of newly signed orders slows down, the project payment collection is lower than expected, and the profitability of real estate business is lower than expected.
